By definition, GDP is made of domestically-produced goods for consumption, investment, government expenditures, and exports, that is, C+I+G+X. When they actually measure GDP, however, statisticians only find a C, an I, and a G that include imported goods and services. In order to correct for that, they have to remove all imports from the formula, which becomes the familiar C+I+G+X-M, where M represents imports. Compounding the error, the formula is usually written as C+I+G+(X-M), where (X-M) is labelled “net exports,” a subliminal version of the trade balance. It looks as if net imports subtract from GDP while, in fact, M is subtracted only because it was already hidden in the available data.
Mark Perry rewrites a Bloomberg report on trade to make it more accurate.
Michael Rappaport compares us in our roles as consumers to us in our roles as voters.
Brian O’Brien is no fan of conscription.
Steve Landsburg imagines a conversation between Greg Mankiw and Larry Summers on corporate taxes.
Back to trade and protectionism: here’s Walter Olson on wine.
